PHARMACEUTICAL EXECUTIVE

26 Competition

Thinkstock / Olivier Le Moal

highly effective competitors (“HECs”) focus on a specialty mission. Since The 7 Habits of Highly 1923, Novo Nordisk’s employees from top to bottom have fervently commit- Effective Competitors ted to “preventing, treating, and ulti- mately curing diabetes.” Novo’s CEO Lars Sørensen exemplifes the evangeli- In October 2013, Pharm Exec released its “12th Annual cal leadership and zeal that character- Pharmaceutical Industry Audit” (http://www.ittybittyurl.com/W izes such companies and ensures em- bi), which identifies how well companies advance shareholder ployee alignment to and execution of this mission: “We attract people that value by evaluating eight benchmark corporate metrics. This want to work for a company that sees audit ranked Novo Nordisk, Gilead Sciences, Biogen-Idec, itself as part of a solution and are not Celgene, and Roche (in order) as the top five pharmaceutical just working for the money to reward companies. Editorial Advisory Board member Stan Bernard of the shareholders but to make a differ- Bernard Associates conducted an analysis of these five industry ence.” Novo currently treats 20 million stalwarts to identify seven habits that drive their success. Here diabetics by manufacturing over 50% of the world’s insulin, including ge- are his conclusions – William Looney, Editor in Chief. neric insulin which is sold in emerging economies and extremely poor coun- Biopharma’s best companies provide valuable lessons for tries. Gilead Sciences, Biogen-Idec, and preparing, planning, and playing to win. Here’s how: Roche are similarly passionate about overcoming viral diseases, multiple By Stan Bernard sclerosis, and cancer, respectively.

Commit To and Execute a visiting NASA Space Center in 1962, Knowingly Pursue and De- Specialty Mission he asked a janitor what he was doing. velop the Best Products 1 In ‘61 President John F. Kennedy The janitor responded, “I’m helping 2 HECs cleverly hunt for the best announced the aspirational goal of put a man on the moon, Mr. Presi- internal and external drug candidates landing the frst man on the moon and dent.” While many biopharmaceutical and effciently develop these com- tasked NASA with this mission. While companies focus on a specialty area, pounds. They demonstrate exceptional JANUARY 2014 www.PharmExec.com

Competition 27

scientifc acumen, clinical judgment, Abraxis Bioscience; partnered with including head-to-head studies versus and R&D leadership, the three top many IPO companies such as Epi- Byetta and other competitors. Despite traits of successful R&D organiza- zyme and Agios Pharmaceuticals; being delayed by regulatory authori- tions, according to a recent BCG 10- and invested in “some of the best ties, Victoza became a U.S. blockbuster year analysis of 842 developmental venture-backed companies in the hot- within one year. molecules. Moreover, HECs knowing- test areas of biomedicine,” includ- Biogen trumpeted its new MS ther- ly pursue compounds that their rivals ing epigenetics, immunotherapy, and apy Tecfdera so much prior to its 2013 might consider irrational gambles. For regenerative medicine. According to U.S. launch that analysts claimed example, Gilead in 2011 took a seem- Celgene’s SVP Business Developmet there was “a bolus of patients in the ingly huge risk by acquiring Pharmas- George Golumbeski, “We tend to be queue ready to transition to therapy” set and its lead Hepatitis C (“HCV”) looking for things that could be trans- with an estimated $100 million in antiviral compound sofosbuvir for formative, truly step-ahead therapies, pent up demand, which the Wall Street $11 billion, the “largest deal ever for a not just incremental gains.” Journal reported “overwhelmed some company with no products in late stage development and valued at a 98% pre- mium to its previous closing price,” Top competitors conduct election-style — not according to FirstWord Pharma. So- fosbuvir was considered a particularly military-style — launch campaigns and seek risky compound since previous NS5B to win the “Pre-Launch Years” versus the polymerase inhibitors for HCV had traditional but belated “Launch Year.” failed clinical development. In fact, Gilead’s senior leadership – including three top executives with Win The Pre-Launch Phase pharmacies.” Called the holy mother science Ph.D.’s and over twenty years’ Once HECs fnd their products, of all launches” by ISI analyst Mark experience at the company – made a 3 they are experts at launching Shoenebaum, Tecfdera doubled ana- shrewd scientifc and strategic deci- them. These top competitors conduct lysts’ frst quarter projections and is sion. The company relied on its lead- election-style — not military-style — expected to reach blockbuster status ing anti-viral research experts and launch campaigns and seek to win the in 2014 and exceed $5 billion annual knowledge of nucleotides from its “Pre-Launch Years” versus the tradi- global sales by 2018. FirstWord rates HIV research to place a huge bet that tional but belated “Launch Year.” No- the launches of Tecfdera, Celgene’s so far appears to have paid off. The vo’s launch of GLP-1 diabetes agent multiple myeloma agent Pomalyst, FDA last month approved sofosbuvir Victoza demonstrated such extensive and Roche’s breast cancer therapy under the brand name “Sovaldi,” and pre-market preparation. At an analysts Kadcyla as the top three 2013 product FactSet Research Systems projects an- meeting in 2010, Novo SVP Jakob Riis launches outperforming analysts’ con- nual sales of the drug to reach $6.4 said, “We’ve also been very conscious sensus projections. billion by 2017. Gilead exhibited the about early on opting our resources audit’s highest “Enterprise Value and our preparedness to engage in … Play Their Game Growth” measure for its unmatched 200,000 interactions last year of more HECs shape their specialty operational effciency. than an hour’s length with physicians 4 markets to force rivals to play Similarly, Celgene took a big stra- globally explaining the science be- their game. For example, Gilead tegic risk by developing a derivative of hind GLP-1” to maximize pre-launch shaped the HIV market to be a drug the notorious drug Thalidomide into awareness. Novo successfully counter- combination game based predomi- the $4 billion blockbuster Revlimid launched against Lilly’s GLP-1 rivals nantly on its compounds. A relatively for multiple myeloma. Not resting on Byetta and Bydureon, including steal- late player in the HIV space, the com- its laurels, Celgene has emerged as ing their thunder prior to the 2008 pany in 2004 launched the two-drug “biotech’s shrewdest, nimblest deal- American Diabetes Association Meet- fxed-dose drug (“FDC”) Truvada maker” which is “fast building the ing. The Journal of Managed Care and two years later the three-drug biotech industry’s best network of Pharmacy highlighted Victoza’s launch FDC Atriplia, consisting of Truvada partnerships with innovators,” com- as a textbook case, saying the prod- and Bristol-Myers Squibb’s Sustiva ments Xconomy Biotech. uct “came to the market with unusu- (efavirenz). Preferring to use all Gil- The company has acquired stra- ally robust data demonstrating clini- ead ingredients, the company in 2012 tegic players such as Pharmion and cal comparative effcacy and safety,” launched a four-drug, once-daily PHARMACEUTICAL EXECUTIVE JANUARY 2014 www.PharmExec.com

28 Competition

single-tablet regimen nicknamed the tinuum. Competing at multiple levels pipeline through active deal-making. “Quad” and branded as Stribild, provides many advantages, including These efforts have provided Celgene which is projected to have 2015 sales better stakeholder relationships, more with a 90% pricing margin, the high- exceeding $3 billion. product combination opportunities, est in the PE Industry Audit. Gilead is determined to dominate and improved operating effciencies. the HCV space using the same game Not surprisingly, Novo and Roche Seek to Dominate Their plan: leverage its new agent Sovaldi held the top two spots in the PE Indus- Market as the backbone for frst-line HCV try Audit of sales-to-assets, a measure 7 While many companies fo- therapy and fxed-dosed combina- of corporate effciency. cus on specialty areas of unmet and tions. As a testament to the com- growing therapeutic need, the most pany’s competitiveness, Gilead has successful competitors seek to domi- refused to collaborate with Bristol- Roche dominates nate and own their respective thera- Myers Squibb on co-development of oncology — the peutic areas. With an impressive a highly promising regimen featuring portfolio of insulin and non-insulin Sovaldi and BMS’s drug daclatasvir; world’s largest products, Novo is the leading player instead, Gilead has chosen to develop pharmaceutical in the burgeoning global diabetes a similarly-effective HCV regimen market with a 27% global market featuring only Gilead products. Gil- market. share according to EvaluatePharma ead’s market-leading approach to Research. Roche dominates oncology drug combinations has transformed Mitigate the Impact of — the world’s largest pharma market the HIV treatment paradigm and is Payers and Generics — where it owns nearly one-third of likely to do the same in HCV. 6 In the industry’s Competitive all cancer product sales worldwide Lifecycle Stage, both payers and ge- totaling $22 billion. Roche markets Compete At Multiple nerics represent signifcant threats. the industry’s three best-selling can- Levels HECs realize that payers are not only cer brands and is poised to have fve 5 HECs practice of “Multi-Level customers but also potential “bud- of the six best cancer sellers by 2018. Competition,” the strategy of seeking get competitors,” often fghting for Gilead is expected to capture 43% of to win not only with individual brands the same funds as biopharmaceuti- all anti-viral sales by 2018 by own- but also at the franchise, portfolio, cal companies. These payers use nu- ing the HIV area while challenging and corporate levels. Roche wants merous tactics to control the access, the HCV arena. Catapulted by its to win with its HER2 breast cancer pricing, reimbursement, utilization, recently launched Tecfdera, Biogen agent Herceptin, a $5 billion brand; and perception of innovative drugs, will cast an increasingly dominant its emerging HER2 franchise which including leveraging generic competi- shadow over the MS market. The includes recently launched agents Per- tion. Roche has relied on innovation company is expected to grow from a jeta and Kadcyla; its overall oncology to address payers and generics. The 34% to a 50% share of the projected portfolio which includes blockbust- company recently launched 2nd gen- $20 billion MS market by 2018. ers Avastin and Rituxan as well as eration follow-on products Gazyva In summary, highly effective com- biomarkers and diagnostics; and to and Kadcyla for its aging blockbust- petitors demonstrate three fundamen- further enhance its industry-leading ers Rituxan and Herceptin, respec- tal ways to win. They prepare to win oncology reputation. tively. Kadcyla, which links Her- by committing to a specialty market Similarly, Novo’s diabetes portfo- ceptin’s antibody with ImmunoGen mission with the right people and lio offers multiple brands and fran- chemotherapy agent DM1, is one of products. They plan to win by shaping chises including basal, rapid-acting, 25 antibody-drug conjugates in the their market and competing at multi- and premix insulins; GLP-1 agents in- company’s pipeline. ple levels. They play to win by master- cluding Victoza and soon other GLP-1 Celgene has also emphasized new ing the Pre-Launch, countering payers combinations; and a myriad of devic- product development with a three- and generics, and seeking to dominate es. For over two decades, Biogen has pronged strategy: expand Revlimid, their competitors. concentrated on Multiple Sclerosis, its core $5 billion hematology-on- resulting in the industry’s most robust cology agent, into new indications; Stan Bernard, MD, MBA is President MS franchise (Tysabri, Avonex, Fam- develop new blockbusters such as of Bernard Associates, LLC, a global pharmaceutical industry competition consulting pyra, and Tecfdera) to help manage apremilast for psoriasis and other frm. He can be reached at SBernardMD@ this debilitating disease across its con- indications; and build its early-stage BernardAssociatesLLC.com.